Transform or disappear, the Darwinism of IT: In order to adapt to a digital world, a two-speed IT is needed.
Despite the importance of IT in today’s digital world, Chief Information Officers (CIOs) often struggle to get their voices heard by executive committees.
Faced with this challenge, IT departments are being forced to reinvent themselves to adapt their companies to the fast paced evolution of technology. The Boston Consulting Group has developed a business approach that allows IT to shed off its appearance of a heavy cost center and to adopt a new, more realistic persona as a quality service provider, partnering with users and the management.
Would you be a professional, a student in engineering, a student in a business schools or would you just be interested in digital transformation and its implications on IT, Learn with three BCG experts why and how to manage an IT department as a business in order to transform a company and adapt it to a digital world.
Join the conversation: #2SpeedIT

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One of the excellent courses at Coursera for information technology bosses and managers.

HN

Oct 18, 2015

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Very structured approach. Thank you for sharing with me.

Na lição

Transform or Disappear

In this final module, we will see that IT must continually transform itself to adapt to an ever-changing environment. We will take a look at how that should be done: there are rules to make this happen.

Ministrado por

Antoine Gourévitch

Vanessa Lyon

Partner and Managing Director at The Boston Consulting Group

Eric Baudson

Managing Director at The Boston Consulting Group

Transcrição

[MUSIC] As Vanessa said, if you want everything to stay the same, you need to change everything. This is really true in IT. In IT department. For two reason, The first one is that, if you look at an internal IT department, you have an issue of productivity. Eve Meyer, a sociologist, says that if you don't change an organization, it will lose productivity by seven percent per year. Also, we have seen that an IT organization is a complex organization with a landscape. And when time goes by, the complexity is increasing. So you have to make sure that you transform your IT organization to stream line and simplify and contain the complexity. That's one reason why we, an internal reason, but you also have an external reason. The world is changing and the technology is changing. Technology is changing very fast, and that allows you to do new things. And to be able to take advantage of these opportunities you have to trust in your IT. Let's take the example of a consumer goods company. Who understood the technology was changing, and they could do much more. They understood in three domains, that they could be much more efficient. The first one was the sales department domain. The forecast of one item at one country level was right, but with a margin of error of 200%. And the forecast of the country level was right at five percent. So the margin of error was plus or minus five percent, much to high. Because of that there were lots of stocks, lots of products that were out of stocks, and they decided to do something about it. How could technology help? Technology could help, because this happened because there were so many ERPs that were scattered, so many that were scattered. So by consolidating everything on one SAP instance or platform, they were able to consolidate all the data. By having a better knowledge of the data, the margin of error went from 200% to 25% on one item and five percent to one percent from one country. Can you imagine the cost savings that it brought? So that's one part. A second domain was about R and D. This company was very secretive, working many [INAUDIBLE] and they were developing chemical products, so chemical materials. They took one example of one where they, it took them one year and $1 million to the [INAUDIBLE] and some people said, If we were working with the external world, maybe we could do different things. We could be much more productive. So they did an experiment. They set up a network to collaborate with many universities and some suppliers. It was an open innovation network. It was well. Everything was working well, and then they said, okay, we are looking for this molecule, and we will give $50,000 for someone who finds the molecule and give us the right. The passenger request one day, and 36 hours later, they got an answer from the University where researchers said, I know exactly what you need, this is a molecule and this is how to do it. The guy got $50,000. But the funding for the [INAUDIBLE] apartment was, it took us one year and $1 million. If we do it this way, it take us 36 hours and $50,000. It complete change of the word of the game. Then a young programmer had an idea. And he said, well, I see many that are determined anywhere, because in the digital world, many people are posting on blogs, posting on Twitters, on Facebook, sending email to call centers, or calling call centers. Plus it was accompanied with 200,000 people. There were a lot of information that were recorded in the salesforce databases. And he said, maybe we could do some big data and earn big data for all this information, gather the information see what's coming up. So he did his own programming using an open source b data platform, and he analyzed 2.5 million information every day. What he found out was amazing. He found out that some brands people were not happy at all. But for some brands, people were very happy. Every information that was coming in was praising the brand, praising the people. But the brand were not as developed as it could be. The marketing people when this was, let's say, okay we'll do some brand extension. They did brand extension and then suddenly, sales and profit increased by three. A factor of three. Just because, when IT guys, why do you think they take the reasons the right way? So and of course you deploy your platform. Again, complete changes of the rules. So if you want to take advantage of the new technology, you really have to change the way your organization. You have to transform yourself. In order to transform yourself, you have to know where you want go to. Where you want to go, some things are clear, like in the case of the forecast for the sales department. Some are less clear, like doing experiment is something very important. And also you need to know where you're starting from. Knowing exactly the starting point is very important. Because if you know the starting point and you can compare it to where you want to go, you can create a case for transformation. What is a starting point? A starting point is, not only the cost of the IT. That's important, but it's not only the cost. It's also the balance sheet. What are you assets? What are your liabilities? It's also your workforce. What is a right workforce? What is a workforce we need to retrain? It's also the structure of that organization. You have the right roles in your organization. The productivity of your people, so time to market of the organization. The project portfolio, your legacy. You need to assess all of that and compare it to, I would say, the best practice of the industry. When you know that, and when you have a good idea of where to go, you are ready to embark on a fantastic journey, it's a transformation journey of IT.